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Monday, June 21, 2010

Crude Oil Extends Rally Off May's Low, Remains Overbought

Crude oil closed higher on Monday as it extends the rally off May's low. Profit taking tempered early session gains and the mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If July extends the rally off May's low, the 62% retracement level of last month's decline crossing at 81.13 is the next upside target. Closes below the 20 day moving average crossing at 73.95 would confirm that a short term top has been posted. First resistance is today's high crossing at 78.92. Second resistance is the 62% retracement level of last month's decline crossing at 81.13. First support is the 10 day moving average crossing at 75.70. Second support is the 20 day moving average crossing at 73.95.

Natural gas closed lower due to profit taking on Monday and below the 10 day moving average crossing at 4.913 signaling that a short term top is in or is near. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short top might be in or is near. Closes below the 20 day moving average crossing at 4.660 would confirm that a short term top has been posted. If July extends the rally off May's low, the 62% retracement level of the November-May decline crossing at 5.429 is the next upside target. First resistance is last Wednesday's high crossing at 5.196. Second resistance is the 62% retracement level of the November-May decline crossing at 5.429. First support is today's low crossing at 4.826. Second support is the 20 day moving average crossing at 4.660.

The U.S. Dollar closed higher due to short covering on Monday as it consolidates some of this month's decline. The high range close sets the stage for a steady to higher opening on Tuesday as September might extend today's bounce off the 25% retracement level of the November-June rally crossing at 85.71. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 87.28 would confirm that a short term low has been posted. If September extends this month's decline, the 38% retracement level of the November-June rally crossing at 83.83 is the next downside target. First resistance is the 10 day moving average crossing at 87.06. Second resistance is the 10 day moving average crossing at 87.06. First support is today's low crossing at 85.36. Second support is the 38% retracement level of the November-June rally crossing at 83.83.

Gold posted a key reversal down due to strength in equities and the US Dollar on Monday but not before posting a new all time high. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are diverging but remain bullish signaling that sideways to higher prices are possible near term. If August extends this year's rally into uncharted territory, upside targets will now be hard to project. Closes below the 20 day moving average crossing at 1225.80 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 1266.50. First support is today's low crossing at 1231.60. Second support is the 20 day moving average crossing at 1225.80.